The (Quick) Rise and Fall of Essential Products

After selling only 88,000 units in 2017, the Android co-founder and brains behind the Essential Phone may be stepping away from his post for good.

Rubin’s startup, Essential Products, has scrapped plans for a new device to add to its lineup and is looking for buyers to take over operations. The announcement comes just one month after the company opened its doors in the U.K.

Source: BGR

“The company hasn’t yet made a final decision on a sale,” Mark Gurman wrote in the Bloomberg piece, but has “canceled development of a new smartphone.”

Progress on the sale

According to a source close to Essential Products, the company has recruited Credit Suisse Group AG to oversee the sale and it has already received an offer from at least one suitor. Since its inception, Essential Products has garnered more than $300 million from investors like Amazon, Tencent Holdings, and Redpoint Ventures. Last year, Equidate, which runs a market for private company stock, valued the company at around $900 million to $1 billion.

Foxconn also poured some capital into the startup. After it was first announced in late 2016, Sprint put together a massive campaign in an effort to get an exclusive contract with the Essential Phone. Overall, Essential Products spent around $100 million on its first line of products – about ⅓ of what it spent on building the entire company.

Source: Business Insider

Rubin’s decision to cancel plans for an upcoming device doesn’t necessarily take plans for one off the table entirely. Rubin addressed the decision on Twitter.

We always have multiple products in development at the same time and we embrace canceling some in favor of the ones we think will be bigger hits. We are putting all of our efforts towards our future, game-changing products, which include mobile and home products” he posted.

A troubled launch

The original Essential Phone debuted with a cutting edge look that beat Apple’s iPhone X to market with a nearly all-screen front. It also has a unique ceramic casing and its Android software is nearly identical to the stock version running on Google’s Pixel phones, giving it another unique sales proposition.

It gained a lot of traction and interest before launching in August 2017, but the momentum didn’t last very long. It Due to complications in production and shipping, the device shipped much later than promised and pre-orders were still being filled during the holiday season – months after its official launch.

Source: Android Lane

The first few people to receive their Essential Phones had quite a few complaints, too. There were issues making calls, using the touchscreen, and taking clear photos with the device’s camera. Priced at $699 and having this many issues resulted in only 20,000 orders within the first month. In October, the company gave the smartphone a $200 price cut, which boosted sales, but not its popularity.

The new smartphone, which was planned for later this year, will not be happening as planned, but engineers and resources have been redirected to work on a smart home device that is expected to be released in 2019.

No surprise here

While it may sound shocking that Rubin, who is known for sticking to his guns and seeing projects through to the end, may be having second thoughts, analyst Richard Windsor says something like this was expected to happen eventually.

Source: CNET

“The problem is that the digital ecosystem is currently firmly rooted in the smartphone meaning that any purchase decision a consumer makes is almost entirely influenced by the smartphone experience,” he notes on his blog. “Therefore, trying to create a hardware-based ecosystem experience without a smartphone is like trying to build a car without wheels.”

He predicts the final sale price will only be a fraction of the $900 million-$1 billion evaluation from one year ago.